Oil falls 1 percent as supply concerns fade

Roman Schwartz
February 7, 2019

"China trade talks", said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

International Brent crude oil futures on Monday were down 20 cents, or 0.32 percent at 0339 GMT to $62.54 a barrel, after closing up 3.14 percent in the previous session to their highest close since November 21. The sanctions aim to block USA refiners from paying into PDVSA accounts controlled by Venezuelan President Nicolas Maduro.

"The collapse in oil prices late previous year has resulted in more cautious spending by USA oil explorers", said Dhar. Bearish traders are expressing concerns over the weakening global economy and signs of a slowdown in factory production.

Top oil exporter Saudi Arabia could replace this volume from spare capacity of about 1.8 million bpd, and other members of the Organization of the Petroleum Exporting Countries such as the United Arab Emirates and Kuwait are also able to pump more after an OPEC-led supply cut began in January.

Markets Underpinned by Sanctions and Production Cuts...

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US sanctions announced last Monday on Venezuelan oil companies are likely to cause Maduro economic woes.

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OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russian Federation, according to a Reuters survey.

"The U.S. would look elsewhere for oil imports, and refiners will adapt to it". The lender now predicts growth of 3.5 percent this year, the weakest in three years and down from 3.7 percent expected in October.

U.S. President Donald Trump last week said he would meet his Chinese counterpart Xi Jinping in coming weeks to try to settle the two countries' dispute.

However, Venezuela's woes assuaged traders' mounting fears to a degree, with the USA sanctions limiting oil transactions between the Bolivian republic and other countries, and the European Union considering imposing more sanctions on the government of president Nicolas Maduro. Therefore, I have to conclude that speculation over the positive outcome of U.S. The surge comes shortly after Washington slapped sanctions on the Venezuelan state oil company PDVSA.

With China on Lunar New Year holiday until next week, which reduces the chances of a trade deal this week, and the market likely to continue to absorb the lost supply from the sanctions, prices could remain under pressure all week.

Citgo, the eighth-largest US refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control.

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